Mixed Message.

Initial Jobless Claims (week ended 4/25/2015)

– New Claims seasonally adjusted 262,000. Previous was 296,000
– New Claims unadjusted totaled 250,815  a decrease of 28,982 previous.
– 4-week Moving Average   283,750. Previous was 285,000.

This is the lowest level of Initial Claims in 15 years.  One problem is that Initial Jobless Claims is only loosely correlated with the overall jobs picture representing only about 12% of the people moving in or out of the jobs market each month. In March about 8,000,000 people moved in or out of the jobs market.  About 70% of Job Losers are not eligible for unemployment because their jobs are temporary. My point is that while low Initial Claims is good it is not a surrogate for the overall jobs picture.  Nonetheless people act as if it is.

 
Personal Income and Outlays (March 2015)

– Personal Income month/month  +0%. Previous was +0.4%
– Consumer Spending month/month +0.4%. Previous was +0.1%
– PCE Price Index month/month   +0.2%. Previous was +0.2%
– Core PCE price index month/month  +0.1%. Previous was  +0.1%
– Personal Income year/year   +3.8%. Previous was  +4.5%
– Consumer Spending year/year   +3.0%. Previous was +3.3%
– PCE Price Index year/year     +0.3%. Previous was +0.3%
– Core PCE price index year/year  +1.4%. Previous was +1.4%.

Looking at this and yesterday’s GDP data one sees a mixed message.  Personal Income was up but spending was flat.  Yesterday’s GDP report showed that real per-capita annual disposable income grew substantially during the 1stQ2015 (up $506 per year quarter-to-quarter). The majority of the $506 gain went to increased savings not spending.  The worker/consumer is playing a very good game of poker leaving economists scratching their heads.

 

Employment Cost Index (1stQ2015)

– ECI quarter/quarter +0.7%. Previous was +0.5%
– ECI year/year +2.6%. Previous was +2.2%.

Chicago PMI  (April 2015)

– Business Barometer Index  52.3. Previous was 46.3.